Palantir's Q2 shines, CEO Karp says it's benefiting from LLM economics revolt

Palantir reported strong second quarter results with revenue growth of 93%, touted strength in US commercial demand and raised its outlook.

The company reported second quarter earnings of $1.062 billion, or 41 cents a share, on revenue of $1.935 billion, up 93% from a year ago.

Wall Street was expecting Palantir to report non-GAAP earnings of 34 cents a share on revenue of $1.81 billion.

US commercial revenue was up 149% from a year ago to $764 million and US government revenue was up 90% to $809 billion.

Palantir said it closed 220 deals of at least $1 million, 98 deals of at least $5 million, and 73 deals of at least $10 million. Total contract value in the quarter was $3.373 billion, up 49% from a year ago.

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For those who keep score at home, Palantir's Rule of 40 score is an unheard of 155%. Palantir is just ahead of Nvidia's 153%. The Rule of 40 is a popular metric for SaaS companies. If you add your year-over-year revenue growth rate to your profit margin you should get to 40.

As for the outlook, Palantir said it expects third quarter revenue to be between $2.16 billion and $2.164 billion, well above the estimate of $2 billion. The adjusted operating profit outlook was also well ahead of estimates. For 2026, Palantir said it is projecting revenue between $8.15 billion and $8.16 billion, well ahead of Wall Street's estimate of $7.73 billion. Palantir expects its adjusted income from operations to be between $4.889 billion to $4.897 billion.

In a shareholder letter, Palantir CEO Alex Karp took on frontier model companies. Choice quotes include:

• "Every organization in the world is awakening to the risks of handing the creators of the language models the keys to their institutions, of letting the models loose within their homes...Our customers have declined to become vassal states of the language labs. And the market is now shifting dramatically underfoot."
• “The models have grown and thrived by essentially ingesting the entire written work product of our civilization. And those models, as well as their creators, now have their sights set on global industry. We have been the beneficiaries of the revolt that is underway against submission to this way of working.”
• "Put simply, we have now generated more profit in a single quarter than we did in total revenue in the same period the year before."
• "It must be noted that we have achieved these results with a miniscule and shrinking sales headcount, another way in which we have discarded conventional wisdom in favor of our own, unique path."
• "While our U.S. commercial business is on fire, we believe it is nonetheless just nascent."
• "The limitations and faults of the token industrial complex, which has threatened to overtake and dominate the world economy, have increasingly been exposed."

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